2019 (4) TMI 396 - HC - Customs

Levy of ADD - imports of normal Butanol or N-butyl Alcohol from Saudi Arabia - period of investigation by the designated authority - material injury or not - termination of investigation - Held that - It may be noted that though the designated authority seems to have proceeded under the assumption that the scope of the investigation was circumscribed by the prayer of the petitioning domestic industry, the petitioner company, the Rules of 1995 do not support such a narrow interpretation. Rule 4 thereof, as already stated, sets out the duties of the designated authority and requires it to submit its findings, provisional or otherwise, to the Central Government not only as to the injury but also the threat of injury to an industry established in India or the material retardation to the establishment of an industry in India, consequent upon import of a like article from the specified countries. Therefore, the designated authority was wholly unjustified in holding that it had no mandate to look into the possible threat of injury to or material retardation of the domestic industry consequent upon the import of the product from Saudi Arabia. The refusal by the designated authority in the case on hand to look into any possible threat of injury or material retardation to the establishment of any industry in India therefore falls short of the statutory mandate. That apart, the specific conclusion of the designated authority was that the investigation had to be terminated in accordance with Rule 14(b) of the Rules of 1995. It is only when the designated authority does not find sufficient evidence of dumping or, where applicable, injury to justify the continuation of the investigation that it can terminate it. In the case on hand, as already noted supra, the findings recorded by the designated authority clearly demonstrated sufficient evidence of dumping within the short span of three months by the exporters/producers from Saudi Arabia and also the injury caused to the domestic industry thereby. Therefore, the designated authority could not have taken recourse to this clause for justifying the termination of investigation. In fact, none of the clauses in Rule 14, which deals with termination of investigation, had application whereby the designated authority could have taken such a step. When the designated authority found that several other countries who were exporting the very same product to India had been subjected to anti-dumping measures, allowing exporters/producers from Saudi Arabia to do so without subjecting them to the same anti-dumping measures, even though their activities within a short span of three months clearly indicated their invasive capturing of the domestic market and the consequential injury to domestic industry, was clearly not warranted. Though the counter-affidavit stressed upon the designated authority not rendering final findings and recommendations only on the ground that the dumping took place for three months during the period of investigation, the final findings, as set out supra, clearly indicate to the contrary. This Court finds that the designated authority, having recorded findings in support of the injury sustained by the domestic industry by dumping of like products by exporters/producers from Saudi Arabia, failed to carry through on the same note and strangely did a volte face, when it came to the final recommendation. This was on the strength of his misconceived notion that a three month span of dumping was insufficient for recording a finding - there is no such mandate in the Rules of 1995, the Final Findings dated 28-11-2017 are set aside and the matter is remitted to the designated authority for consideration afresh. Petition allowed by way of remand.

Issues Involved:
1. Sufficiency of the period of investigation for evaluating injury.
2. Justification for termination of the investigation by the designated authority.
3. Requirement of continuous imports during the period of investigation.
4. Determination of normal value and export price.
5. Causal link between dumped imports and injury.
6. Scope of investigation regarding threat of injury or material retardation.

Detailed Analysis:

1. Sufficiency of the period of investigation for evaluating injury:
The petitioner company contended that the designated authority was incorrect in concluding that the period of the last three months of imports from Saudi Arabia was insufficient to evaluate injury to the domestic industry. The designated authority's final findings noted that the short period of production and commercial production of just one month constrained the determination of a representative and realistic normal value for cooperating producers/exporters. The court found that the designated authority's reliance on the three-month period to justify the termination of the investigation was unsustainable, as there is no mandate in the Rules of 1995 requiring a longer duration for evaluating injury.

2. Justification for termination of the investigation by the designated authority:
The designated authority terminated the investigation under Rule 14(b) of the Rules of 1995, stating that there was not sufficient evidence of dumping or injury to justify the continuation of the investigation. However, the court noted that the findings recorded by the designated authority demonstrated sufficient evidence of dumping within the short span of three months and the injury caused to the domestic industry. Therefore, the designated authority could not have taken recourse to this clause for justifying the termination of the investigation.

3. Requirement of continuous imports during the period of investigation:
The petitioner company argued that there is no requirement in the rules that imports must occur throughout the entire period of investigation. Even three months of imports, evidencing the capturing of the Indian market share to the extent of 39%, would be sufficient for the designated authority to draw necessary inferences. The court agreed with this argument, stating that the existence of imports even during part of the period of investigation establishing a causal link between dumping of imports and injury suffered by the domestic industry is sufficient.

4. Determination of normal value and export price:
The designated authority determined the normal value and export price for the cooperating and non-cooperating producers/exporters from Saudi Arabia. The normal value was determined on the basis of cost of production, selling, and general costs, including a reasonable profit margin. The export price was determined on the basis of the best available information. The court found that the designated authority had no difficulty in determining the normal value, export particulars, and margin of dumping in relation to exporters/producers from Saudi Arabia.

5. Causal link between dumped imports and injury:
The petitioner company asserted that the exports from Saudi Arabia were undercutting and depressing the prices of the domestic industry, causing material injury. The designated authority noted that the imports from Saudi Arabia had entered India in significant volume in the last three months of the period of investigation and were undercutting the prices of the domestic industry in the market. However, the designated authority concluded that the causal link between imports from Saudi Arabia and injury to the domestic industry was not conclusively established on the basis of three months of export period. The court found that the designated authority's conclusion was not justified, as there was a clear causal link between dumped imports and material injury suffered by the domestic industry.

6. Scope of investigation regarding threat of injury or material retardation:
The designated authority stated that the investigation was only for determination of material injury and not for evaluating the threat of material injury or material retardation to the domestic industry. The court found that the designated authority was wholly unjustified in holding that it had no mandate to look into the possible threat of injury or material retardation of the domestic industry. Rule 4 of the Rules of 1995 requires the designated authority to submit its findings as to the injury or threat of injury to an industry established in India or material retardation to the establishment of an industry in India. Therefore, the designated authority's refusal to look into any possible threat of injury or material retardation to the establishment of any industry in India fell short of the statutory mandate.

Conclusion:
The court set aside the final findings dated 28-11-2017 and remitted the matter to the designated authority for fresh consideration, taking into account the scheme and structure of the Rules of 1995 and the observations made by the court. The designated authority was directed to complete this exercise expeditiously, within two months from the date of receipt of a copy of the court's order. The writ petition was allowed to the extent indicated, and no order as to costs was made.

← Previous Next →